The recovery that had begun in 2010 faltered last year in Valle d'Aosta. According to Prometeia estimates, GDP grew by 0.5 per cent, compared with 2.1 per cent in 2010.
In industry, value added decelerated abruptly, from the summer onwards showing the effects of the worsening national economic situation and the weakening of foreign demand. According to the Bank of Italy survey, firms' turnover remained broadly stable in real terms after increasing sharply the previous year. Investment was generally weak, reflecting the low capacity utilization rate and deteriorating expectations.
In construction, the negative phase under way since 2009 persisted. The number of transactions in the property market registered another slight decrease, falling further below the 2006 peak, and house prices adjusted for inflation declined.
In services, the rate of growth in value added was half that of the previous year, falling to 1.1 per cent according to Prometeia data. Retail trade was affected by the weakness of household consumption, while revenues from tourism increased, driven mainly by overnight stays by visitors from abroad. Traffic of heavy trucks on the region's motorways increased.
In the labour market, over the year as a whole, the number of persons in work and the employment rate declined; the unemployment rate rose to 5.3 per cent. The chief factor in the fall in employment was the further drop in both industry and construction. The number of wage supplementation hours authorized decreased for both ordinary benefits and for special benefits and benefits granted under waivers. The crisis continues to hit young people hardest. Their unemployment rate rose sharply. Our calculations regarding levels of education in Valle d'Aosta show a lag in investment in human capital; among residents, the schooling rate and the percentage of university graduates are lower than the average both for the North-West and for the whole of Italy.
The cyclical weakening impacted on households' and firms' demand for credit. It was accompanied by a tightening of banks' lending standards. In 2011 the growth in bank lending to customers resident in the region slowed.
With reference to consumer households, the slowdown in mortgage loans was accompanied by an increase in the annual percentage rate of charge on loans for new houses. The new mortgages financed purchases of houses of greater value. The annual change in consumer credit turned positive, thanks to the contribution of non-bank financial companies.
The deceleration in lending to firms can be put down mainly to the decline in term loans, in connection with the weakness of business investment; by contrast, lending in the form of credit lines increased. Provisional data indicate that lending to firms continued to contract in the first quarter of 2012.
In the course of the year the spread between the interest rates on short-term bank loans to firms and the European Central Bank's reference rate continued to grow. The increase was much sharper in the last quarter of the year, in concomitance with the growing severity of the sovereign debt crisis and the change in the general economic outlook.
Credit quality, measured by the default rate, remained high for consumer households; for firms it was broadly unchanged, reflecting an improvement in the construction industry and services and a worsening in manufacturing industry. Signs of deterioration in the quality of banks' loan portfolios come instead from the growth in impaired loans both to firms, particularly those with 20 or more workers, and to households.
The stock of deposits raised by the banking system in the region shrank in the case of firms while it grew for consumer households. The value of securities belonging to local households and held for custody and administration at banks diminished; in particular, investment in non-bank bonds, shares and investment fund units declined while that in Italian government securities and bank bonds increased.
